Generic Rx Plan Lowers Medicare Psych Costs

Action Points

Note that this model-based analysis demonstrates that covering generic drugs for schizophrenia and bipolar disorder for patients in the Medicare "doughnut hole" is cheaper and more effective than not providing coverage.

Be aware that the model was unable to adjust for socioeconomic factors; the cost-effectiveness in low-income patients is less clear.

Providing generic drug coverage to mentally ill Medicare beneficiaries who hit the drug coverage gap cost less overall than leaving them with no drug coverage, a study found.

Healthcare costs were lower by roughly 3% among Medicare beneficiaries with bipolar disorder who had generic-only coverage rather than no drug coverage, and 5% lower for those with schizophrenia and generic-only coverage, according to a study published in the February issue of the American Journal of Managed Care.

Patients with the severe mental disorders who can't afford and therefore stop taking their medication are more likely to require psychiatric hospitalizations and experience high rates of comorbid, chronic conditions like heart disease and diabetes, Yuting Zhang, PhD, from the University of Pittsburgh School of Medicine, and colleagues found.

"These data suggest that no drug coverage in the coverage gap is more expensive than generic drug coverage due to greater nondrug costs," the authors wrote. They also noted improving health outcomes with fewer hospitalizations in patients who didn't go without drug coverage.

In 2007, when data for this study was acquired, the Part D beneficiaries shouldered 100% of drug costs after hitting the $2,400 mark and before reaching the catastrophic limit of $3,850.

But the Affordable Care Act will close the coverage gap -- commonly called the "doughnut hole" -- by 2020, when patients will pay 25% of drug costs for both brand-name and generic drugs. In 2012, beneficiaries in the doughnut hole paid half of the costs of brand-name drugs and 86% for generic drugs, percentages that will drop slowly until 2020.

To help some beneficiaries right now, the federal government currently gives large premium and cost-sharing subsidies to those with low incomes. "Each year, roughly 50% of beneficiaries enrolled in Part D plans receive a low-income subsidy (LIS)," the authors noted. "Due to more generous benefits, those with LIS are not exposed to the coverage gap even when their pharmacy spending reached the coverage-gap threshold."

Based on the study findings, "policymakers and insurers should consider a faster decrease of the percentage paid by patients for generic drugs as a means to improve the health of patients who do not qualify for LIS plans while conserving healthcare resources," they wrote.

In 2007, 62% of seniors with bipolar disorder and 56% of those with schizophrenia entered into Medicare's coverage gap, research showed. But they were less likely to hit the coverage limit if they elected to receive only the lower-cost generic versions of drugs.

In the study, Zhang and colleagues analyzed Medicare claims data for schizophrenia and bipolar patients continuously enrolled in Part D plans in 2007, comparing those with continuous generic-drug coverage and those who had no gap coverage.

The researchers stratified data for those who qualified for Medicare due to disability and those who qualified due to age, because their treatment plans might differ. They also controlled for age, sex, race, and the number of comorbidities.

The authors acknowledged that beneficiaries might select generic-only coverage plans because they realize they are sicker and therefore anticipate using more drugs and entering the coverage gap. The sicker patients might have introduced bias into the study.

"However, despite plan self-selection and the possibility of bias, we found that a generic-only coverage strategy was favored over no gap coverage, with this finding being robust to variation in sensitivity analyses," the researchers wrote.

Savings were roughly the same whether patients qualified via age or disability, the findings showed.

Zhang and colleagues also found higher costs for LIS beneficiaries compared with those with no gap coverage or generic-only coverage.

"That could be because LIS patients are sicker or use more drugs because of full coverage," the authors wrote. "The lack of adjustment for socioeconomic factors in our model is likely a factor as well.

"For this reason, we consider analyses that include LIS coverage less robust than those comparing the other two coverage strategies."

The study was funded by the National Institute of Mental Health, the Agency for Healthcare Research and Quality, and the University of Pittsburgh Central Research Development Fund.

Zhang reported no financial conflicts of interest. One co-author reported links with the National Institutes of Health, Forest Labs, Bristol-Myers Squibb, and Pfizer.

Reviewed by F. Perry Wilson, MD, MSCE Instructor of Medicine, Perelman School of Medicine at the University of Pennsylvania and Dorothy Caputo, MA, BSN, RN, Nurse Planner

MedPageToday is a trusted and reliable source for clinical and policy coverage that directly affects the lives and practices of health care professionals.

Physicians and other healthcare professionals may also receive Continuing Medical Education (CME) and Continuing Education (CE) credits at no cost for participating in MedPage Today-hosted educational activities.